No doubt about it. Liquidations can be stressful. Each is its own “elf on the shelf” so to speak and takes time and concentration to navigate. This isn’t easy while you’re generating new loans and servicing existing ones.

Often we see our lender clients do the right thing, but in the wrong order when it comes to liquidations and protecting the SBA Guaranty. Many times their procedures range from few to none. Sometimes they have frequent staff turnover, and many times a special assets team takes over, that doesn’t have the SBA experience or training, and the SBA Team is no longer involved.

Some tips to help you.

  • Know your SBA forms, SOP 5057 2 and the Servicing& Liquidation Matrix. The more you know, the easier it is to act.
  • Special assets groups.If you have a special assets group, make sure they have a basic understanding of liquidation procedures. Or better yet, make it a team effort between the special assets group and the SBA Team to ensure all actions taken fall within SBA requirements.
  • Written procedures and checklists. We can’t say it enough. These help everyone stay on point and help avoid missed actions that can hurt you later.
  •  Liquidation Plans should be a standard operating procedure, regardless of whether you’re required to get SBA approval. On a loan level, this will help your team stay on task and get all necessary requirements addressed.
  • Litigation Plans. SBA knows there are times where legal action needs to happen quickly to protect the lender and the SBA. Basically, SBA allows you to start legal actions without approval. However, you should get a litigation plan done as soon as you can, and if the estimated costs are more than $10,000, submit it to the SBA for approval. This will help ensure you don’t exceed $10,000 before you get SBA approval. Be sure to go back for approval of any overage from the original amount.

Liquidations can throw you. You  can be the best SBA lender in the region, yet a simple $250,000 loan can sendyou spinning if you haven’t got your procedure in order and you aren’t prepared.

 At JRB, Servicing &Liquidations is one of my specialties. I’m here to help you get those “liquidation elves” off the shelves – and wrapped up.

Rebecca Mendoza
Senior Associate